Small modular reactors (SMRs) are nuclear generating units that are about the size of railroad cars and provide about one-tenth to one-fourth the power of full-size reactors. As a result, they...
Five Nuclear Challenges
Building reactors requires new federal commitment.
has been underway for several years. While the American Nuclear Society (ANS) reports significant progress in the licensing schedule, there is not a single design that either has received a full and non-contingent design certification, or is being actively promoted by nuclear manufacturers. 2 Without NRC certification, there are no new nuclear plant designs to compare and thus no plants to construct. 3
Without at least two certified designs available for review and analysis, no U.S. utility prudently can decide whether to commit to a build/no-build decision. Industry experience has demonstrated that even minor changes in design can result in substantial cost and schedule consequences.
• Federal Policy Must Change : Even if certified nuclear plant designs were available today, there is an absence of the necessary federal policy in place to begin nuclear plant construction. According to a May 2008 Congressional Budget Office (CBO) study, the economic value of a new nuclear plant hinges on many factors including the proposed regulation of carbon dioxide (CO 2) emissions. 4 This study argues that if new federal policies impose less than a $45 charge per ton of CO 2 emissions, then new nuclear construction will remain unattractive to utilities and investors. The CBO’s analysis shows that the failure to economically penalize greenhouse gas emissions will result in the cost of operating polluting plants to be more financially attractive to investors than the cost of new nuclear power plants. 5 Only when CO 2 emission penalties reach $45 a ton will a new nuclear plant become financially competitive against the use of coal and natural gas (assuming specific capital costs and cost of capital targets as defined by CBO, MIT, and the Energy Information Administration).
Until Congress and the executive branch institute firm rules that address CO 2 emissions, no utility company will realize the competitive value of a new nuclear plant. Furthermore, until such legislation is passed and implemented, it’s in the financial interest of utilities to delay the development of nuclear plants and to build coal and gas-fired plants in their place.
• Trillion Dollar Predicament : Even with licensing completed and emission policy resolved, there is an industry-wide shortfall when it comes to financing large power plants. Simply stated, the power industry can’t afford to build the 40 to 50 new plants needed to replace the existing 104 units that are set to retire.
According to the CBO, the expected cost of a completed new nuclear plant is unknown. 6 Based on an analysis of nuclear power history, total costs could add up to more than $10 billion per unit. 7 It turns out that a price tag of $10 billion (plus or minus a few billion) is a deal breaker for most utilities regardless of how productive or how profitable each plant might be. There are only four utilities in the United States with stockholders’ equity exceeding $10 billion, and only one with a stockholders’ equity above $20 billion. 8 Only one or two of these companies reasonably can afford the financial risk of building a single new nuclear